© Provided by City AM The FTSE dropped slightly this morning as news came in that UK's GDP dropped by 2.9 per cent in January while UK exports to the EU were down by its sharpest drop on record.
London's blue-chip index dipped 0.33 per cent to 6,714 points shortly during the first hour after markets opened.
Earlier this morning, ONS data showed that monthly GDP fell by 2.9 per cent in January as a fresh national lockdown took hold of the UK economy, according to new ONS data.
Read more: UK economy shrank 2.9 per cent in January as third lockdown took hold
The January figure, which was 9 per cent below its February 2020 level, was driven by a decline of 3.5 per cent in services, the Office for National Statistics said.
Moreover, the value of UK exports to the European Union plummeted by £5.6bn after the Brexit transition period ended, in the sharpest drop since records began.
Total exports of goods fell by £5.3bn, or 19.3 per cent, from December 2020 to January 2021. The fall was mainly driven by a 40.7 per cent drop in exports to the EU.
Read more: Brexit: UK to EU exports collapse by 40 per cent following end of transition period
All eyes on oil
Oil markets powered higher overnight, with the recent bull market correction appearing to have run its course as expected. US Dollar weakness boosted black gold, with Brent crude rising 2.0 per cent to $69.55 a barrel and WTI climbing 1.90% to $65.90 a barrel.
Oil markets are trading sideways in Asia, with local markets once again displaying a reluctance to chase prices higher, preferring to buy dips. Both contracts, however, will have Monday's highs firmly in their sights now that inflation fears have ebbed temporarily.
Brent crude will target the $71.50 region into next week, and WTI should target the $68.00 a barrel mark. Only a fall through $66.50 a barrel for Brent crude or $63.00 a barrel for WTI delays the rally.
Read more: Analysts: UK economy 'like a punchdrunk boxer hanging off the ropes'
Gold's price action rings alarm bells.
The overnight session should have been fertile ground for gold to continue moving higher. Steady US yields, a weaker US Dollar and a strong rally by equities failed to impact gold prices, which instead eased by 0.25% to $1722.50 an ounce overnight. That negative tone continues in Asia, with gold falling another 0.20% to $1719.00 an ounce.
Although gold did spike overnight, all that achieved was to trace out a double top at $1740.00 an ounce. That and the $1760.00 an ounce breakout point form formidable resistance to any future gold advances now.
Given the unimpressive price action overnight, risks have swung to the downside and gold looks set to retest $1700.00 and this week's lows at $1676.00 an ounce next week. Flows out of gold ETFs continue at pace, adding another negative dimension to the gold picture.
Overall, gold is running out of time and excuses with the crypto-market seemingly chipping away at its Dollar debasement, inflation-hedging role.
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